FICO® ScoresÎ and credit scores can be the same thingâbut FICO® also creates different products, and other companies create credit scores. You can think of a credit score as the general name for a computer model that analyzes consumer credit reports to determine a score. FICO® offers a specific brand of credit scoreâa FICO® Scoreâthat many lenders use when determining a credit applicants creditworthiness. But some lenders choose to make their own scoring models or use competitors credit scores.
Having a good credit score is crucial for getting approved for loans and credit cards with favorable terms. But understanding all the different types of credit scores can be confusing. You may have heard of FICO scores and credit scores, but is there really a difference between the two? Keep reading to find out.
What Is A Credit Score?
A credit score is a number calculated based on information in your credit report It represents your creditworthiness or how likely you are to repay debt Credit scores are created by credit scoring models, which analyze consumer credit reports from the three major credit bureaus – Experian, Equifax, and TransUnion.
Higher scores indicate lower credit risk So if you have a good credit score, lenders will likely offer you better rates and terms on loans and credit cards On the other hand, a lower score can lead to higher interest rates or even rejection for credit.
Credit scores typically range from 300 to 850. The most commonly used credit scoring models are FICO scores and VantageScore.
What Is A FICO Score?
FICO scores are a type of credit score created by the Fair Isaac Corporation (FICO). When people refer to credit scores, they often mean FICO scores specifically.
FICO has been creating credit scoring models since 1956. Over 90% of top lenders use FICO scores to make lending decisions
FICO periodically releases new versions of its credit score model. Currently, the most widely used model is the FICO Score 8. However, lenders may also use older or newer versions like FICO Score 9 or FICO Score 10.
In addition to the base FICO score, there are industry-specific FICO scores tailored for auto, mortgage, credit card, and insurance companies.
Key Differences Between FICO Scores and Credit Scores
While FICO scores are one of the main types of credit scores, there are some key differences between the two:
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Different Scoring Models: The term “credit score” refers to any type of credit score, including both FICO and VantageScore. FICO scores are just one specific scoring model.
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Range Variations: FICO scores and VantageScores both range from 300-850. But industry-specific FICO scores for auto or credit cards have a range of 250-900.
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Calculation Method: While both FICO and VantageScore analyze information in your credit reports, their algorithms and the weight they give to certain factors differ slightly. This can lead to some scoring variation.
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Versions: There are multiple versions of FICO scores that lenders can choose from. VantageScore also has its own versions (VantageScore 3.0, 4.0, etc). Even the same scoring model can produce different scores depending on the version.
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Industry-Specific Scores: In addition to its base scores, FICO produces tailored scores for specific credit products. VantageScore does not currently offer industry-specific scores.
Why Do I Have Different Credit Scores?
Given all the scoring model options, it’s common for your credit scores to vary:
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Different Credit Bureaus: Your FICO score at Experian will likely differ from Equifax or TransUnion since their credit data varies.
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Different Versions: Your FICO 8 score is calculated differently than FICO 9 or 10, leading to score differences.
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Different Models: Your FICO 8 score can vary compared to your VantageScore 3.0, for example.
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Industry-Specific Scores: FICO auto scores differ from FICO mortgage scores since they weigh factors differently.
While you may have hundreds of credit scores, it’s impossible to track them all. Focus instead on maintaining consistently positive credit behavior. This will help improve your scores across different models.
Which Credit Score Do Lenders Use?
When you apply for credit, you won’t know which exact credit score the lender uses. Some possibilities include:
- FICO Score 8
- FICO Auto Score 2
- FICO Bankcard Score 8
- VantageScore 3.0
Each lender makes their own decision on which credit scoring model best suits their needs. Your goal is to improve all your scores by building a strong credit history.
How to Check Your Credit Scores
While you can’t control which scores lenders use, you should still monitor your own scores. Here are some options to check your credit scores:
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Free credit reports: Get your credit reports from Experian, Equifax, and TransUnion. This doesn’t give you scores but let’s you check for errors.
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Free FICO scores: Many credit card issuers like Discover and Chase offer free FICO scores on monthly statements or online.
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Purchase scores: You can buy FICO scores and other credit scores directly from MyFICO or Credit Karma.
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Free trials: Sign up for free trials on sites like Experian to access your FICO scores and reports from all three bureaus.
Checking your own credit scores doesn’t hurt your credit. Be sure to check regularly so you can address any issues and keep improving.
Key Takeaways
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Your credit score represents your creditworthiness and ranges from 300-850. Higher is better.
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FICO scores are a commonly used type of credit score created by the Fair Isaac Corporation.
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Different credit scoring models, versions, and credit bureaus can lead to varying credit scores.
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Focus on consistently good credit habits to raise your scores across different models.
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Check your credit reports and FICO scores regularly to catch any problems early.
Understanding the difference between a general credit score and your specific FICO score is key to effectively monitoring and improving your credit. Check your scores often and address any issues to build positive credit. This will help ensure you get approved for credit with the best rates.
What Is My Real Credit Score?
Companies can choose which score to purchase and use when reviewing applications and managing customers accounts, which is one reason theres competition in the credit scoring world. With this in mind, there isnt a single, “real” credit score.
For example, when youre shopping for an auto loan, you may try to get offers from several lenders. One lender might use a FICO® Score 8, another a FICO® Auto Score 2, and a third a VantageScore 4.0. Your scores may vary, but each is very real in the sense that the lender is using it to determine if you qualify for a loan and the rates and terms to offer you.
Generally, you wont know which of your three credit reports or which credit score a lender will use. However, because credit scores all rely on the same underlying data, building positive credit can help you get good credit scores regardless of the model. Conversely, negative items, such as late payments or a bankruptcy, could hurt all of your credit scores.
Why Do I Have Different FICO® Scores?
As mentioned above, FICO® creates different FICO® Score models to work with each credit bureaus credit reports. And, FICO® periodically releases new FICO® Score models to incorporate changing consumer behavior, new regulations and technological advances. Because not all lenders and businesses use the same scoring models or versions, you may have severalâor even hundredsâof credit scores.
For example, the FICO® 10 T score is a variation of the FICO® Score 10, the latest version of the companys base scoring model. Its the first FICO® Score to consider trended dataâa look at how youve managed accounts over the past 24 months. But lenders may use older models, such as the FICO® Score 8 or FICO® Score 9âor even older versionsâwhen determining whether to approve a loan or credit card application. Or they may choose to use one of VantageScores credit scoring models, such as its most recent 3.0 and 4.0 versions.
FICO®s base scores arent intended for a specific type of lender or loan. But FICO® also creates industry-specific scores for auto lenders and credit card issuers. These models build on top of a base model to give creditors in that industry a more tailored score, which ranges from 250 to 900.
FICO Score vs Credit Score [What’s the Difference?]
FAQ
Why is my FICO Score different from my credit score?
Which is more important, FICO Score or credit score?
While there are many types of credit scores, FICO Scores matter the most because the majority of lenders use these scores to decide whether to approve loan …
Is your FICO Score the most accurate credit score?
FICO scores aren’t any more or less accurate than VantageScore credit scores. And remember, credit-scoring companies have multiple versions of scores.
Is FICO considered a credit score?
A FICO® score is a particular brand of credit score. A credit score is a number that is used to predict how likely you are to pay back a loan on time. Credit scores are used by companies to make decisions such as whether to offer you a mortgage or a credit card.